The advantages of a high-speed rail – an example between Madrid and Barcelona

In 2008 a high-speed rail connection has been opened between Madrid and Barcelona shortening the time getting from one city to the other to 2 hours and 38 minutes. The main goals of the construction were the reduction in travel time on the corridor and the increase of capacity and safety conditions on the rail line (Frontier, 2011).

There are numerous changes that followed the launch of the HSR between Madrid and Barcelona. It shifts passengers from other transport modes, for example car, traditional rail and air (Dyjak et al., 2011). Constructing a new line between the two cities that are 600 km far from each other has a significant effect on air transport too (Rus, 2008). Previous to 2008 nearly 90 percent of the people travelling between Madrid and Barcelona went by air, but since the HSR has been built the number of passengers that go with train are increasing and even surpassing passengers going with planes. This trend is pointing towards a more environmentally friendly future as emissions per passenger on a high-speed train are approximately one-fourth of the emissions generated by flying by plane or driving a car. This is a great advantage as there is a growing public concern about environmental issues in Europe (Bachtler & Wren, 2005).

Lowering the emission of carbon dioxide is however not the main goal of most of the passengers who choose HSR to other means of transport. It is also more comfortable and convenient to travel with HSR. The train offers assigned reclining seats, computer outlets, movies, headsets, good food and gloved attendants to make people satisfied while travelling in these trains. Also, people can get to the station just 10 minutes before the departure unlike at airports, thus lowering the time spent on travelling. These are the main reasons why though it is not cheaper to travel by HSR than by plane between Madrid and Barcelona many choose this form of travelling (Rosenthal, 2010).

Also, polycentricism is a goal in Spain. As there is a low location index in Spain, with expanding the high-speed railway network the country tries to avoid concentration and centralization of the economic activity (Dyjak et al., 2011). The HSR line between Madrid and Barcelona has an impact on mobility, accessibility, socio-economic structure, urban image and spatial effects. These factors are considered to be significant but it is hard to quantify them in monetary terms (Frontier, 2011).

One of the most striking examples for the growing economic activity caused by HSR is the town of Ciudad Real located 120 miles from Madrid which has completely vanished because of the railway and the highway that bypassed the town. Now that an HSR station is located near the town and makes travel a lot less time-consuming, Ciudad Real has come alive as the HSR attracted a host of industries. Also, the University of Castilla-Lamancha has grown in size and importance too just because it is linked by the HSR (Catan, 2009).

Spain was always a top destination of tourists from all around the world. Now that more and more HSR lines are being built connecting cities all over the country it is easier not just for the workforce to be more flexible but also for the tourists to discover the cultural diversity of different Spanish regions (Raileurope, 2011). First, mostly business travelers were expected on the line between Barcelona and Madrid, but it is busy on the weekends too which means that Spanish people and tourists also use it to discover the cities. The government says that high-speed trains boost tourism which is the nation’s biggest industry and business travel. Also, constructing and maintaining a line make jobs for thousands of people. In the cities near the lines many companies that are involved in the different sectors of high-speed rail are investing in offices, plants and yards near the stations (Sheehan & Bee, 2012).

However, there are downsides too of the HSR line between Madrid and Barcelona. One of the problems is the corridor effect that shows the problem of the development of regions located between junctions of HSR lines. In these cases the infrastructure passes through the regions in between the stops without having much impact (Dyjak et al., 2011).

Moreover, the Spanish government wants to spend up to 77 billion dollars to expand and improve the lines while there is still an economic crisis.  When they built the Madrid-Barcelona line Spain it the economy was rising, but maybe now it would be wiser to cut the spending. Even if the number of passengers that choose HSR rises, the railroad system cannot cover its costs yet even between Madrid and Barcelona (Sheenan, 2012).

There are protests against the HSR too. A violent separatist group in the Basque country called Eta has launched an environmental campaign against the train. They even shot a local contractor in 2008 because he worked on the line (Tremlett, 2009). This shows that some people don’t want the country that is separated out somewhat to be intertwined (Catan, 2009), because they fear their independency and that they would assimilate to the rest of the country.

Nóra Szabó

References

Bachtler, J., & Wren, C. (2005). The evaluation of EU cohesion policy: Research questions andpolicy challenges.

Catan, T. (2009). Spain’s Bullet Train Changes Nation. The Wall Street Journal. 

Dyjak, R., Magda, I., Rosik, P., Zawistowski, J., Gapski, T., & Bienias, S. (2011). Evidence based Cohesion Policy and its role in achieving Europe 2020 objectives. In T. Gapski, S. Bienias, & E. Opalka (Eds.), . National Cohesion Strategy.

Raileurope. (2011). High Speed Rail News: Travel by High-Speed Train inSpain. High Speed Rail News.

Rosenthal, E. (2010). High-Speed Rail Gains Traction in Spain. The New York Times. Retrieved from 

Rus, G. D. (2008). The economic effects of High Speed Rail investment. OECD/ITF Joint Transport Research Centre Discussion.

Sheehan, T., & Bee, F. (2012). Economic impact of high-speed railvaries in Spain. San Francisco Chronicle.

Sheenan, T. (2012). Spain’s high-speed rail system offers lessons forCalifornia. The Orange County Register.

Tremlett, G. (2009). High-speed rail in Spain: From Madrid to Barcelonain a flash. Guardian.

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How can a boat lift help a region to develop?

But what is a boat lift? – one might ask the question. I assume that not all of the readers are exactly familiar with the concept of a boat lift, but in order to understand the following story everyone should get a basic idea of it.

In a nutshell a boatlift is a machine which transports boats between water at two different elevations. Every boatlift in the world moves vertically (like an elevator) but there is an extraordinary one which is in the focus of interest now. The Falkirk Wheel is the only boatlift in the world which moves rotational. The Wheel has two gondolas, containing 300-300 tonnes of water, into which boats enter. While the Wheel is rotating one of the gondolas is ascending and the other one is descending. During this process one boat is being lifted from downside to upside and the other one is being lowered  from upside to downside. (If you want to see how does it work you can check it here)

This amazing construction is near to Falkirk – a town located in the heart of Scotland halfway between Edinburg and Glasgow. The Falkirk Wheel connects the Union Canal, which starts in Edinburgh, and the Forth and Clyde Canal, which originates in Glasgow. The difference in height of the two canals at the wheel is 24 meters - a huge distance which has made it impossible to travel between Glasgow and Edinburgh by boat for decades.

Now that the reader is more familiar with the Falkirk Wheel I can return to the original question: how can a boat lift help a region to develop? Before the construction of the boatlift, Falkirk and the areas along the canals were  in the state of economic stagnation for decades. The canals were constructed in the 19^th century but the development of modern transport infrastructure such as railways and roads has lead to the reduced use of them. This meant that they were abandoned, full of rubbish and contamination;  buildings, houses, and shops near to the canals were deteriorating. People moved away from the neighborhood of the Union and Forth and Clyde Canals to Edinburgh or Glasgow.

This situation has changed when the Falkirk Wheel was constructed. Since 2002 the region has been showing the signs of economic prosperity and population growth. The existence of the boatlift have to kinds of benefits. The first are the direct benefits which have arose strictly from the reconstruction and operation of the Wheel and the canals. This include tourism (there are around 500,000 visitors in Falkirk every year since 2002) and boating activity. The second type of benefits are indirect ones referring to the exploitation of development opportunities and further investment. The connection of Edinburgh and Glasgow implied that transportation and travelling on boat required less time and money. New areas outside the cities became more easy to reach and starting a business along the canals became profitable. This boosted the creation of new business parks, industrial estates, central distribution centers and more than 2,000 canalside homes in the region.

What do basic data show us about these benefits? Empirics suggest that the direct connection of Edinburgh and Glasgow had advantageous effects on Falkirk and the regions alongside the Union and the Forth and Clide Canals. In the first four years after the construction of the boatlift Falkirk’s employment rate has risen by 10%, five times larger than the Scottish average. The activity rate has risen by 6% - high above the Scottish one. Total population has grown by 0,6%, which is quite noticeable considering the fact that the population in whole Scotland decreased during this period. This means that people migrate here because of the new jobs and opportunities. There were more than 4000 new jobs created the retail sector. Besides these, business sector increased by 13%  and Falkirk has become a retail center focused on services. This helped the region to change its’ economic profile by giving up old heavy industry and manufacturing sectors and turning to these new, more profitable and prospering sectors.

To summarize we can say that the short answer for the original question is the following. The rotating boatlift helped in regional development by connecting Falkirk and the canalside regions to Edinburgh and Glasgow, by attracting new labor force and tourism, and by creating the conditions for services and retail activities to expand from Glasgow and Edinburgh. Isn’t it exciting how this unique construction affected the economy of the whole region?

Petra  Lévay

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Shrinking the Atlantic Ocean – A Case of Transatlantic Superspeed VacTrain

by Shota Gvaramadze

The idea of it was first proposed by Michel Verne in his book in 1888, a son of the famous French science fiction author Jules Verne. But it was not until 60ies when engineering visionaries started to get into the science of building a transatlantic superspeed vac-train (TSV). The idea is spectacular and audacious, as well as unimaginably hard and expensive by today’s capacities and costs.  

A TSV train would hover above the track without physically touching it thanks to the magnets, eliminating the rail friction altogether (which limits the train speed). Magnetic levitation train is no longer a science fiction; such train already has been serving a route between Shanghai city and its airport since 2004. Different from a conventional maglev train, TSV would be moving in a vacuum tunnel submerged and fixed 50 meters above the bottom of Atlantic Ocean (shown on the picture), eliminating another source of friction - air. By eliminating two sources of friction, air and rail track, the train will be able to accelerate up to the speed of 8000 km/h allowing the train to cover a distance of 5000 kilometers between London and New York in just 54 minutes, shrinking the time and space between two continents (it would take 20 minutes to reach the full speed and same time to slow down to make the journey comfortable for passengers. This is the reason why it would take about 54 minutes to travel and not less).

Different sources estimate the cost of project from $175 billion up to staggering $12 trillion making the project unimaginable to be embraced by any current government. For a comparison, average cost of building a 500 km HSR track in Europe is estimated to be around 10 billion EUR (operational costs not included). This number doesn’t even reach the lowest proposed cost of $175 billion. However, as the engineering and material sciences evolve and advance, costs will be pushed down to a point where undertaking such venture might even become possible. In spite of all costs, uncertainties, technical feasibility, risks associated with under water travel (which is way outside of the scope of this article), I think it would still be interesting to look into the socio-economic impacts of such a grandiose undertaking should it one day become a reality.

The Japanese and European experiences show that HSR trains that cover the distances between two cities in less than 2.5 hours can obtain 80-90% of all air traffic and 50% if HSR train covers the distance in less than 4.5 hours. TSV easily meets this requirement. Financial Times in 2009 listed London – New York flight as the third busiest international route with annual number of passengers slightly over 1,6 million. By transporting 80-90% of those passengers, TSV will be one of the busiest train routes on earth.

High Speed Rail (HSR) projects almost never cover their infrastructure and operational costs and are therefore financed by tax payers’ money. Such spending is always justified by the wider social and economic benefits HSRs bring. These are passenger time savings, reduction in congestion, reduction in accidents, reduction in environmental externalities and benefits including the development of the less developed regions. Historically, United States and UKhave favored HSR projects much less than other European countries, Japan or China. However, if such project was ever given a green light by British and American governments, TSV would make impossible possible and have a number of wide scale social and economic effects on two cities.

A study on UK’s InterCity 125/225, a HSR network, has shown that towns that became reachable from London within 1 and 2 hours, had higher employment rates as well as gross value added per head after the construction of HSR line. Employment increase was highest in knowledge intensive business services and creative industries. Reason for this is the high cost of tacit knowledge exchange in spite of advancement of information and communication technologies. Therefore, New Yorkand London, two hubs of advanced and high value added service industries have very high potential to benefit from a TSV. Cutting a travel time between two cities from 7 hours (by air) to 54 minutes would enable more frequent business meetings, increase working hours of business travelers and as a result increase the productivity of firms. Extent of productivity will also depend on ticket costs, whether every day commuting would be possible, uniting two job markets into one, increasing the size of the labor market pool and enabling workers to move from less productive to more productive jobs between two cities. These two cities as agglomerated as they already are would become even more competitive, with firms having larger markets and enjoying the scale economies. As world’s two financial centers, these cities probably have most in common than any other two cities in different countries. By having similar physical size and economies, as well as identical intellectual resources and endowments, these two cities could benefit from a shared and united market most. On the negative side, as the output of these two cities would increase, so would the congestion and office rents, which already pose enormous problems to  respective city officials.

As history has already shown, often impossible can quickly become possible. So who knows maybe one day it will really be possible to have lunch on Manhattan and still make it to London for an evening theatre performance. 

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The Success of ZGC Science Park, China

by Anastasiia Shirinina

In the 1980s, the idea of a science park establishment quickly moved beyond the Western countries and parks were also established in Brazil, India, Malaysia, in the former "Eastern Bloc" - in Eastern Europe, CIS and China.  There are about 400 science parks created in the world today. Many others are in the process of creation. The success of science parks in promoting technology transfers and attracting clusters of technologically intensive and innovative firms has motivated countries all over the world, including China, to give an incentive to regional development. Due to the economic significance of China, its unique and complicated political and economic structure, the increasing number of foreign investments targeted to diverse spheres of Chinese economy, its considerable integration into global economy, the Chinese model of science parks can be a very peculiar example.

Zhongguancun (ZGC) Science Park in Beijing is the first and largest science park and cluster of semiconductor, computer, telecommunications and other firms in China. This park is not only a considerable income and research contributor of the economy, but also it bears a historical significance in providing the important transition from government control to relative freedom; moreover, it gave a rise of technological creation and transformation, new science parks foundation based on the government strategy to promote science.

The huge Chinese Zhongguancun Science Park is integrated into the city of Beijing, what is a very typical trend in the last quarter century - "science park in the city",  what makes it easier to connect innovators with financiers, moreover, the park itself reinforces the development of the city. However, all fragments of the parks are located in different parts of Beijing, where the large sub-parks usually have own specialization: software and electronics, new energy and industrial design, new materials, biotechnology, medicine, digital media, creative industries, etc.

There are over 22,000 companies (9 per day were recorded at the peak of development) and about a million employees in this park. No other places in China have such a large pool of talents as ZGC Science Park does. This is the "youngest" region in China - the average age of people here does not exceed 30. Park consists of more than 30 leading universities like Peking University and Tsinghua University, over 200 research institutions represented by the Chinese Academy of Sciences and Academy of Engineering, the largest national library in Asia, and the State Patent Office. The average annual income of the ZGC Park is $75 billion, including 650 companies with annual income more than $10 billion. The park is developing rapidly: profits volume of scientific and technological development has increased by 30% per year at the end of the last century, in the last decade it gave a steady growth over 25% per year.

It all started in October 23, 1980 - one of the scientists from Chinese Academy of Sciences Chen Chunxiao opened the first office of technological development at Zhongguancun street. Chinese economy at the time was in the rapid process of transition to a market economy and was extensively developing. After six years there were about 100 innovation companies, dealing with electronic equipment and marketing. The street became known as "e-street".

The computer era and then Internet era came. Communist Party of China quickly realized what an important phenomenon emerged in the street Zhongguancun, and decided to support it. In June 1999, the "Zhongguancun Science and Technology area of development" was officially opened under the motto "develop science and technology for the construction of the state." This is how the first Science Park appeared in China.

Zhongguancun Park has been created and developed as a top national project under the strict guidance of the Chinese government. However, in August 18, 2000 (almost a year before WTO accession) it was privatized to Beijing ZGC Life Science Park Development Co., Ltd. what was approved by Beijing Municipal Government. This was a breaking point and significant step to marketization of the economy and reason for a rapid rise of the other science parks and scientific centers which are more than 130 nowadays. However, the state still takes careful care of these research parks.

The park has large information, industrial and experimental base.  There are more than twenty multinational corporations’ branches opened here. They are attracted not only by the Chinese government’s subsidies, but the main reason is that the global giants are interested in the local market where they have an immense opportunity to promote their innovative products.

Many important discoveries were made in ZGC Science Park, like the first set of printing technique of Chinese characters, the first crystal of large integrated circuits with millions of subscribers. The first China's commercial Internet was opened here. Thanks to Zhongguancun China achieved the international communication and information standards.

Along with science parks a program of "100 Talents" has been developed: every year 100 brilliant scientists from around the world were invited to work in China, being offered very high salaries. Moreover, a large ethnic Chinese group who had worked for the Silicon Valley companies came back to PRC and led strategically important companies, became the directors of research institutes or held other important positions.

All these achievements and results prove the success of the first and the biggest ZGC Science Park in China, Beijing.

Figure 1. ZGC Science Park Map in 2006

Figure 2. ZGC Science Park Production Distribution

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Skolkovo – the Heart of Russian Modernization

by Aleksei Khlystun

20 years after the collapse of Soviet Union Russian economy is still backward and highly uncompetitive. The major source for resent growth is constantly growing commodity prices which are heavily exported abroad. However, during financial crisis when drop in oil prices led to 7% contraction of GDP, government realized scale of structural problems and in 2009 announced federal program of economy modernization. The aim of this program is to develop new innovation industries, improve competitiveness of domestic producers, and achieve higher levels of economic growth. To accomplish this ambitious goal, authorities decided to utilize development of innovation parks.

The first step in this direction was made in 2010 when federal law “About innovation center “Skolkovo”” was signed. This so called Russian Silicon Valley is expected to be fully completed by 2015; some parts were completed earlier in 2011 and have been already used. Skolkovo project aims creating of environment which will promote concentration of intellectual capital and leading global companies which through cooperation can generate innovations and progress. It will specialize in priority sectors of economy modernization: space and telecommunications, medical technology, energy efficiency, information technology, and nuclear technology. Each of these areas will get own industrial cluster where Russian and foreign companies will work together. Industrial clusters will be situated around main technological park where participants will have necessary facilities, research equipment, scientific and technological expertise, interaction with venture funds and business support.

Given the level of priority devoted for the project, the government approved various benefits and exemptions for companies operating in Skolkovo, including:

• Pay VAT on the general terms or obtain an exemption;
• Pay income tax on the general terms or obtain an exemption (until accumulated profits reach 300 million rubles, profit tax rate is 0%);
• Pension fund contributions at  reduced rate - 14%, payments to the social insurance and mandatory health insurance funds eliminated;
• Organizations are exempt from property tax and land tax;
• Customs duties and import VAT on imported equipment will be offset by a subsidy;
• Simplified work permit procedure for foreigners.

These measures can significantly facilitate operation of innovation companies and provide some incentives for foreign companies to enter and invest into development of Russian economy.

Funding for innovation center will come from the federal budget to develop logistic and scientific infrastructure. Other expenses, related to the commercial environment and innovation projects, will be co-financed. In 2010, $150 million has been allocated from federal budget, in 2011 - $500 million, in 2012 - $730 million and in 2013 - $600 million. Moreover, following companies agreed to provide venture capital for innovation projects in Skolkovo: VTB Capital, Softline, Pangaea Ventures ($20 million), Runa Capital ($5 million), etc. In total, venture capitalists have committed around $260 million. As a result, of this domestic and foreign capital inflow, Skolkovo has already funded 40 start-up companies with $200 million. These companies cover wide range of innovations: visual search, cyber attacks security, 3D animation, data analysis, etc. In total by the end of 2013 Skolkovo will distribute $1 billion for start-ups.

In addition, like in many traditional innovation parks, operation of Skolkovo will be based on the close cooperation between universities and companies. For this purposes, the Moscow School of Management was opened here to teach new business leaders. But the real achievement is that in 2011 an agreement between Skolkovo and Massachusetts University of Technology (MIT) was reached to establish joint Skolkovo Institute of Science and Technology (SIST) which will be capable to integrate business and innovation in educational programs and scientific research. Both of these universities will create pool of qualified labor force for local companies and research centers.

Skolkovo graduates most likely will find job opportunities very quickly since already 200 companies registered there; in the future this number will reach 800. What is more important is that Russian innovation park already managed to attract global high-tech titans such as Intel, IBM, Microsoft, General Electric, Siemens and Sisco. These companies already agreed to open their R&D and production facilities and provide capital for development of Skolkovo. For example, just Sisco alone is willing to spend $1 billion on development of their research facilities. Attraction of foreign is extremely important for success of the project since they can bring additional FDI, enhance image of the project and create necessary critical mass for innovation progress. In the near future ABBYY, Novartis, Honeywell, Airbus, Alstom, DuPont, Google, Kodak, and John Deer can join Skolkovo.

Skolkovo is relatively new project, so it is hard to judge about its success or failure. Even though, some minor projects, as program for improvement of utility sector efficiency and development of business incubators, were completed, according to estimates it can take 15 years for Skolkovo to produce feasible results. At the current stage, creation of Skolkovo Institute of Science and Technology (SIST) in partnership with MIT can be one of the greatest achievements which in the long run can boost innovation acceleration and knowledge spillovers in the innovation cluster. Moreover, it worth to highlight positive dynamic with which Skolkovo attracts big international players and venture capital and subsequently funds new startups (more than 40 in less than year). However, due to country specifics the future success of the project will depend on government policies effectiveness to mitigate problems associated with Russian business environment and stimulate positive dynamic between participants of Skolkovo.    

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Ingria Techno Park: A Promising Start

by Tetiana Protasova

Among the many incubators and techno-parks of Russia, Ingria proudly stands out from the crowd. Not only does it possess a substantial amount of capital (the total volume of investment in the creation of Ingria techno-park equals to 720 ml euro , but it also seems to have learned a lot from the success and failure of similar projects worldwide.

Overcoming Superficiality

Russia currently harbors over a hundred business incubators, most of them financed publicly. The standard list of services provided to the residents includes: free or under-priced office premises, conference rooms, channeling communication with investors and potential clients and mentoring. However, to-date most Russian business incubators and techno parks have not yielded any substantial innovations. World practice shows that getting the money and building a large office block is not enough for a government-initiated project to work. Similar to having the water fill the banks of a river, human capital in the face of incubatees and small businesses along with prospective investors need to come together, and with a bunch of innovative ideas, bring life to the freshly-built premises of a techno park. No wonder such concept as virtual incubators is up and running - material endowment can only be extra to knowledge and networking.

Good Examples

The number of successful enterprises that have left the incubator is by far the most important signal for the prospective incubatees. “The fact by itself that a business incubator has tenants is not a proof of success; the latter can only be decided if we are able to examine the incubated clients and their survival rates in a perspective of 3-7 years.”  Ingria has only been launched in 2007, and with such short history it is too soon to label it complete success, however its pilgrims have gained merit even in this short time frame. Ingria currently harbors sixty-four residents , many of them about to leave the nest of the incubator. Those who already did, are currently co-owned by big international corporations and appear to stand on solid ground.

Media and Culture

Another important success factor of a techno park is its popularity in the media and the familiarity with the concept of incubation in the society. Given it is a fairly new concept for this part of the world, incubation appears to gain popularity among the progressive Russian youth. IT specialists are in the forefront, as Internet is flooded with information concerning incubators and the success stories worldwide.  Further, ideology plays a crucial role in attracting IT specialists to business, as the popular US movies  give a sense of courage, and a feeling that a good concept and a will to succeed are enough to make a break. The fact that Ingria cooperates with all the major universities in St. Petersburg is also a good sign. Universities can offer entrepreneurs equipment, laboratories, training programs and special services that would not be available to them in their own organizational framework . Students and fresh graduates, having closely observed the incubation while studying may also aspire to become a resident, to invent and to cooperate. Acquiring professional skills and specialization is also easier and faster when a student knows what skills he would require after graduating.

Reasonable Eligibility Requirements and Transparency

Eligibility criteria has to be clear and reasonable in order to attract innovative projects. For instance, one of the requirements introduced by Skolkovo is to have at least one foreign specialist on your team when you apply for their residency. No wonder Ingria is already 2 years ahead of Skolkovo . According to Russian press , Skolkovo simply doesn't want to attract prospective specialists, it is said to harbor corruption, as the sphere of nanotechnology is difficult to monitor. This is why Ingria's apparent transparency, ensured by regular report publication, statistical data provision and the support of large multinational corporations is a good start to attract further success.

Hopefully Ingria will continue the inspiring trend and will further serve as a fine example of wise policy-making to science parks, incubators and innovation clusters in other developing countries.

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